Economist drafts bidding redesign language

Thursday, July 21, 2011

BALTIMORE – Prof. Peter Cramton upped the stakes in his crusade against competitive bidding July 17, posting an outline of his plan for redesigning the unpopular program.

The 19-page "Repeal and Reform Legislation for Medicare DME Auctions" calls for repealing Round 1; hiring an auction expert to design the auction; hiring a market monitor to oversee the design, implementation and functioning of all competitively bid markets and products; creating a collaborative, transparent process; and setting protections for beneficiaries and providers.

Cramton was unavailable for comment last week, but in an email sent to HME News and others, he wrote: “Reform of the auctions will bring benefits to all. Medicare beneficiaries benefit from receiving the quality goods and services they need, Medicare providers benefit from being paid sustainable competitive prices for the quality goods and services they deliver…and CMS, the administering agency, benefits from the numerous efficiencies that result from conducting an effective program, largely free of complaint, fraud, and corruption.”

But will Cramton's ideas fly with the very people he seeks to help? The HME industry has long been dead set against any sort of bidding program.

"Dr. Cramton may come up with a great system, but what are the chances that CMS would implement his plan from A to Z?" said John Gallagher, vice president of government relations for The VGM Group. "I don’t think you are going to find unanimous support yet."

However, the industry may have to accept that some sort of auction is inevitable.

"I think many people are slowly beginning to realize there may not be any other way to set prices other through an auction process of some kind," said Wayne Stanfield, executive director of NAIMES. "In fact, an auction process like this may provide stability. If it's effective, it would set prices at a realistic value that the rest of the world couldn't argue with."

AAHomecare last week was still reviewing Cramton's proposal, but its position remains that the program needs to be repealed, said Jay Witter, senior director of government relations.

"Dr. Cramton has a different perspective on fixing the program," he said. "But I think his concerns and questions help move the issue forward even though we don't completely agree on the solution."

AAHomecare has behind-the-scenes committees weighing alternatives to the current competitive bidding program and had a conference call scheduled for Friday. The association said it had no comment on the meeting.

Meanwhile, the industry continues to push H.R. 1041. The House bill, which would repeal the program, picked up four co-sponsors last week, bringing the total to 141.

When it comes to the Senate, however, lawmakers want more details, say stakeholders.

"We do know that the Senate, based on the significant number of meetings that many of us have had, does not seem open at all to a repeal companion bill," said Seth Johnson, vice president of government affairs for Pride Mobility. "Our champions are telling us that time is running out and to stop the program, an alternative must be offered."

Cramton on July 17 also posted a 12-minute video, "Medicare Auction Reform," which describes problems associated with the program. Watch it here:

To read his proposal, go here: HME